The European sovereign debt crisis came back with full force on Tuesday, riots and Nazi uniforms included. German Chancellor Angela Merkel visited Greek Prime Minister Antonis Samaras in Athens, sparking substantial protests and violent clashes with the police. Hours before, the International Monetary Fund had released a report in which it downgraded its 2012 and 2013 global growth targets.

Athens continues to negotiate with the Troika to get a 2-year extension for its deficit targets, but reports surfaced indicating Troika estimates for Greek debt-to-GDP were raised to 179.7% in this year and 181.3% in 2013. Despite Mario Draghi’s open-ended bond buying, Europe is still deep in the rabbit hole.

The images seen around the world of Athens’ main Syntagma Square were reminiscent of the past few years, but seemed to have been forgotten. Ranks of protesters clashing with police, tear gas flying, and the Parliament building somberly witnessing the whole thing revealed that the crisis is very much alive and well. At its climax, the protest erupted in applause and cheers as a jeep paraded two protesters in full Nazi regalia, as others chanted for Merkel to fly back to Berlin.

The German Chancellor was in Athens to express her political support for the government of Antonis Samaras. The situation in Greece is as dire as ever. Athens must find an additional €9 billion in cuts next year in order to secure the next €31 billion tranche in bailout money, while Samaras has been negotiating with the Troika (IMF, ECB, and EU Commission) in order to extend deficit targets by two years. Furthermore, there is talk, according to Barclays, of releasing that next tranche in smaller units, only to avoid short-term default and put further pressure on Greek policymakers. Barclays’ analysts noted that Greece is expected to run out of cash by the end of November.

While Merkel was holding talks with Samaras, reports surfaced indicating the debt situation was looking worse than previously feared. As mentioned above, Troika debt-to-GDP estimates are said to have been raised and Greece, which has committed to bringing its debt down to 120% of GDP by 2020, will see that ratio rise past 180% next year.

Growth remains elusive, though. On Tuesday, the IMF released the latest iteration of its World Economic Outlook, in which it downgraded its projections for global growth to 3.3% this year and 3.6% in 2013 (from 3.5% and 3.9% respectively in July). The institution headed by Christine Lagarde also lowered its forecast for Greece, which is now expected to grow 6% this year and 4% next.

Rather paradoxically, these downgrades come as global equity markets come off massive, central bank sparked, rallies. Greek stocks, for example, have gained nearly 40% over the last three months (as measured by the Global X Greek ETF), compared to the meagre 6.8% the SPDR S&P 500 returned in that time. Stocks that are seen as proxies for the global economy have fared worse: Caterpillar, FedEx, and Alcoa (which posts earnings on Tuesday) have all delivered marginal, or even negative, returns. Financials, like Bank of America and Citigroup, have rallied.

The rebound in Greek equities is a testament to the fact that markets don’t necessarily act in tandem with underlying economies. Greece is ravaged by austerity and a sovereign debt crisis that refuses to go away. While Merkel can pledge her support all she wants and Draghi can buy bonds for eternity, it will take many years for the Greek economy to regain its competitiveness and begin to add jobs in a meaningful way. Until then, expect to see clashes with police and Nazi uniforms.